It came as Bank of England governor Mark Carney said that some of the economic risks facing the British economy that the bank had warned about before the vote could come true.
Small Irish firms selling into Britain are particularly sensitive to a sudden slump in the value of sterling against the euro, and few would have had the means to insure beforehand against such exceptional gyrations in the currency.
Sterling fell to below 85.1 pence — the lowest level for two and half years.
The collapse in the exchange rate represents a massive turnaround from the recent high of 69.3 pence hit almost a year ago, and means the euro has appreciated 23% against sterling in less than 12 months.
Sterling’s renewed slide against the dollar was also dramatic: It fell to a fresh 31-year low, below $1.31, yesterday after the suspension of trading in British real estate funds run by major investment firms.
M&G Investments, Aviva Investors and Standard Life Investments suspended trading in their UK real estate funds, and industry watchers are warning that London office values could fall by as much as 20% within three years of the country’s split from the EU.
There were other new signs of weakness in the economy, reflected in yields on 20 and 30-year British government bonds hitting new lows.
The Bank of England, which is trying to offset the hit to the economy from the June 23 referendum result, said it would lower the amount of capital banks are required to hold in reserve, freeing up an extra £150bn (€179bn) for lending.
Governor Carney said the bank had warned in March that risks around the referendum posed the most significant near-term domestic risks to financial stability.
“Some of those risks have begun to crystallise,” he said.
Chancellor George Osborne met the heads of top banks and said afterwards they had told him they were in good shape to cope with the turmoil caused by the vote’s shock result.
“They report back that capital is strong, liquidity is strong, and we’ve got to make sure that lending is available to businesses... and they’ve assured me that it will be,” Mr Osborne said.
The Bank of England move reversed a decision it took earlier this year, when it started tightening screws on lenders because Britain’s economy had appeared set for more growth.
“It means that three-quarters of UK banks, accounting for 90% of the stock of UK lending, will immediately have greater flexibility to supply credit to UK households and firms,” Mr Carney said.
Amid uncertainty about Mr Osborne’s future as finance minister following the announcement by prime minister David Cameron that he will resign, more responsibility has fallen on Mr Carney and the Bank of England to steer Britain through its political crisis.
Reports this week have shown UK construction unexpectedly shrank at the fastest pace since 2009 in June, while growth in services output slowed.
Shares of real-estate companies and housebuilders fell yesterday even as the main stock market rallied.